_The experience economy – creating communities amongst luxury investors
The visceral thrill of driving or sitting in the passenger seat of a gorgeous classic car. Contemplating the intricate brushstrokes of a painting by one of the world’s great artists. Being dazzled by the flawless gems in an amazing piece of jewellery worn by somebody sitting opposite you in a fine restaurant. Admiring the craftsmanship of a classic chronometer on your wrist.
All of these feelings help to explain why “personal enjoyment” was considered the number one reason why ultra-high-net-worth individuals (UHNWIs) collect and buy luxury assets, according to the respondents who took part in The Wealth Report Attitudes Survey this year. It’s pretty obvious really: we buy things that will give us great pleasure.
Very often, of course, that pleasure is clearly connected to one of our senses – the taste of a great bottle of Bordeaux, the visual beauty of a Van Gogh, the sound of a gurgling V8 or rasping V12 engine. At other times, it might be more to do with our bank balance or our ego.
As our article on the performance of luxury asset classes clearly showed, some of these “objects of desire” also turn out to be shrewd investments. So it’s no surprise then that “capital appreciation” is now the second most important motivating factor when making a purchase, according to our survey respondents – although many people still find it hard to understand the rationale for buying wine when you have no intention of drinking it.
The “status” that ownership brings was in third place. But close behind this top three were more cerebral or social benefits that included “becoming part of a like-minded community”, “intellectual curiosity” and “becoming an expert”.
Community spirit
Buying into a sense of community might sound like an incongruous idea in the context of acquiring a luxury sailing yacht – after all, there could hardly be a better way to get away from it all than by taking to the high seas – but, says Klaas Meertens, owner of Oyster Yachts, it is an important factor for many of the firm’s clients.
This is reflected in the huge enthusiasm of Oyster owners for perhaps the most involved customerparticipation event organised by any seller of luxury assets: a 27-month, 27,000-mile circumnavigation of the world. Over 30 owners have signed up for the fully supported event that started in Antigua in January 2017 and will finish back there in 2019.
“We may organise the Oyster World Rally, but with all the friendships found in this exclusive adventure, truly it belongs to the participants. We’re just facilitators,” says Oyster CEO David Tydeman. “Becoming one of the select few to circumnavigate the globe, particularly in the company of others sailing the same class boat, creates a unique bond.”
Although it would be hard to consider even the least costly Oyster yacht as anything other than a luxury purchase – they start from around £900,000 on the water and go up to over £10m for the flagship Oyster 118 model – owners come from a wide variety of backgrounds, and that is part of the attraction of the events like the World Rally, says Mr Tydeman. “There is a lot of social mixing going on. People leave their egos behind.”
Not all the events attended by Oyster owners are quite so extreme. Having originally bought the firm as an investment opportunity, Mr Meertens caught the sailing bug himself while attending a super-yacht regatta sponsored by the luxury Italian knitwear brand Loro Piana. A clever handicapping system means different-sized boats can all compete against each other at regattas which are usually held in either the Mediterranean or the Caribbean.
Pier Luigi Loro Piana, Deputy Chairman of Loro Piana, says he first became passionate about sailing at the age of 18 when he was asked to crew an 11m boat from Genoa to Elba. “There’s a beauty to it,” he says. “It’s an elegant sport. You have to employ your intelligence. It’s technical, but you also have to take into account the natural elements – the wind, the water, the weather.”
His boat, My Song, has enjoyed various incarnations since the first version was launched in 1988, each bigger and more advanced than the last. The latest, due to start competing this year, stretches to almost 40m and combines the latest racing technology with the ultimate in super-yacht comforts.
“The concept has always been a mix between cruising and racing,” he says. It’s a combination of performance and lifestyle that echoes the ethos of the Loro Piana knitwear brand, and helps to explain its
"People love celebrating together. I see that buzz time and time again"
involvement with the world of super-yachts. Before the Loro Piana regattas there also weren’t really any organised races for “incredible toys” like My Song that could go fast, but also served as a “second house at sea”, Mr Loro Piana explains.
“One of the unique aspects of the sailing community is that it doesn’t seem to matter whether you are sailing a 20-year-old Oyster around the world or spending millions on a 130ft carbon race yacht as Mr Loro Piana has done,” says Mr Tydeman. “Sailors are equally passionate about what they think is the best yacht and what they should do with it, and they enjoy changing their minds – I’ve watched wealthy owners cruising a 100-footer and then soon afterwards racing a catamaran half the size.”
An egalitarian affair
Classic cars are another example where ownership has the potential to become an egalitarian affair, says enthusiast, racing driver and leading London dealer Gregor Fisken. “I’ve had a captain of industry in my showroom who collects Bugattis looking at a car at the same time as somebody of more modest means who collected them in the 1950s. Without the car they had nothing in common, but they became deeply engaged because of their shared passion. Often the car is the icebreaker. And it’s not really about the value, it’s about the condition and the history.”
For many collectors, buying a car is about much more than acquiring a vehicle, says Mr Fisken, who strongly believes people should “buy for love, not investment”. “It’s about access to events like Goodwood, classic rallies or race days.” His eyes go misty as he tries to convey the joy of participating in the Flying Scotsman, an annual rally exclusively pre-war cars which this year will run from Slaley Hall in Northumberland to Gleneagles. “It’s the adventure, it’s the stories in the bar at the end of each day, it’s the feeling of camaraderie, it’s the intoxicating sense of nostalgia.”
More modern cars may not quite evoke such feelings, but certain limited-production models, such as the ground-breaking McLaren F1, are already considered classics and are keenly sought after by collectors prepared to pay over £10m to add one to their collections. The sense of community around the model that ownership brings is a crucial part of the attraction and one that McLaren tries hard to foster. “When you’re purchasing a high-value item, that desire for a sense of community is important,” says James Banks, Head of Bespoke Cars at McLaren Special Operations. “At McLaren you do feel like you are part of a family. It is very important to us to make our customers feel welcome and part of the brand,” he adds.
As well as holding track days on some of the world’s leading Formula 1 circuits, complete with instructors who help owners fine tune their driving skills, McLaren organises lifestyle events in more remote or extreme locations that really bring owners together. “We recently returned from New Zealand where we hosted our first Epic Drive event. A convoy of 31 McLarens joined us, ranging from the F1 all the way through to our Sports Series. In January, we hosted our first ice- driving experience in Finland,” explains Mr Banks. “If we can offer our customers fantastic experiences that deliver a sense of community it helps us build those relationships. For many customers, it’s not just one McLaren – many own several.”
Better together
Taking a share in a racehorse is perhaps the ultimate example of luxury assets creating a sense of community and shared exhilaration.
Harry Herbert, Chairman of Highclere Racing, one of the first and most successful racing syndicates – organisations that enable small groups of people to enjoy owning some of the world’s best horses – says some of his members are wealthy enough to buy their own horses but nevertheless choose to join a syndicate because they relish the experience of enjoying a win with the other owners.
“People love celebrating together. I see that buzz time and time again,” he says. “I think it’s an almost primeval thing that can become very addictive. Some people who’ve owned their own horses can be a bit reticent about joining a syndicate (which costs from around £7,000 to £50,000), but once they do they generally wonder why they didn’t do it earlier.”
Contrary to what some might believe, owning a racehorse should not be seen as an investment, even though Highclere has produced horses like Harbinger, Tamarisk and Petrushka that have sold for many millions of pounds, says Mr Herbert. “Obviously if we sell a horse from a syndicate for much more than we bought it for then the owners will benefit, but it’s not generally a way to make money.”
Back to school
A sense of scholarship and intellectual curiosity can be another driving force for col lectors, particularly those in the art and car world. Gregor Fisken says many of his clients turn into amateur historians, researching the history of their cars and their previous owners, and becoming in the process experts on the model and marque.
It’s a recognised phenomenon in the world of art, too. Recent high-profile examples have included the sale of the late David Bowie’s highly regarded art collection, and Tate Modern’s Radical Eye exhibition of some of the photographs owned by Sir Elton John, selected from what has been described as one of the world’s greatest private collections.
Interviewed about his collection, Sir Elton admits that when he first started buying photographs after coming out of rehab in 1990 he knew very little about the genre, and was simply drawn to the images. However, as the collection grew, so his depth of knowledge increased, and he now considers himself something of an expert.
Giles Huxley-Parlour, co-owner of London’s Beetles & Huxley gallery, which, like a number of the top photography dealerships, has sold pieces into Sir Elton’s collection, says that kind of journey, albeit mostly on a smaller scale – the musician reportedly has over 8,000 photographs – is common among his clients.
“Most people begin their collections because they have a house to decorate and walls to fill,” says Mr Huxley-Parlour. “Often they’ll start with a mainstream photographer whose work they know, but then they discover a world of opportunities. They start to educate themselves, and they graduate towards works that are more sophisticated.”
"Often they’ll start with a mainstream photographer, but then they discover a world of opportunities, start to educate themselves and graduate towards works that are more sophisticated"
The process of learning can in itself become a real luxury for some UHNWIs, he observes – and it’s one that money alone can’t buy. “Going back to being a student, choosing to learn for the pleasure of learning can be a very refreshing process and is often a large part of the collecting experience. As a gallery we focus very much on educating people on the medium, whether it’s via catalogues, talks or online videos – we’ve found our clients really love it.”
Sharing their collections with the wider public, via loans or gifts to galleries, or even joining the growing trend for setting up private museums, is an extension of that scholarship process, adds Mr Huxley-Parlour. “It turns it into philanthropy.” Being able to give something back – yet another example of the benefits that owning luxury assets can bring.
The Radical Eye: Modernist Photography from The Sir Elton John Collection at Tate Modern
Main image (top): Klaas Meertens, at the helm of Maegan, an Oyster 825, tries to fend off Pier Luigi Loro Piana on his boat My Song in the 2016 Loro Piana Sardinia super-yacht regatta. Image courtesy of Oyster